Congestion income

General information

Congestion income originates in the situation where transmission capacity between bidding zones is not sufficient to fulfill the demand. The congestion splits the bidding zones into separate price areas, and the power exchange receives congestion income from the congested interconnection in following way:

This arises from the different prices that the seller receives and the buyer pays when electricity flows from the higher price area to the lower price area. The seller acting in a lower price area receives lower price for electricity compared to the price the other party pays for electricity in the higher price area, and the power exchange receives surplus income, which it then pays to the Transmission System Operators (TSOs).

How the congestion income is shared in Baltic Sea area

The Nordic congestion income is shared between the four Nordic TSOs (Energinet.dk, Statnett, Svenska Kraftnät and Fingrid) based on a common agreement. The current agreement has been in force since the beginning of 2012. By virtue of it, those TSOs, between whose systems the congestion income has arisen, share the congestion income in equal proportions. Exceptions to this rule may be decided mutually by the countries entitled to receive the congestion income on the corresponding cross-border interconnector.

On the interconnections between Finland and Estonia, the congestion income is evenly shared between Fingrid and Elering, the Estonian TSO.

How the congestion income is used

Fingrid spends the received congestion income on increasing the transmission capacity on its cross-border interconnectors according to the EU regulation. On two years in early 2000's, the income was used on lowering grid tariffs as is shown below.

* The costs of the investments have been fully allocated on the year in which the project has been finished. Targeting investments on interconnections between Finland and Sweden and Finland and Estonia.** Information available beginning from 2012

In 2016, Fingrid starts to report the congestion income, investments and costs to maintain the cross-border capacity according to the Finnish national regulatory authority's decision on a new regulatory model. According to the reporting that ends in 2015, Fingrid spent more money on investments to new cross-border capacity and to costs to maintain the capacity than it received as congestion income during 1997-2015.